mastering big "d" – turning the omnichannel myth into reality

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WHITE PAPER
MASTERING BIG "D" – TURNING THE
OMNICHANNEL MYTH INTO REALITY
By: Christoph Herrmann, Posted on LinkedIn Pulse, on February 1st, 2016
©hm+p2015
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In times of big “D“ – id est omnipresent digital transformation – the
buzzword carousel is turning faster and faster. In the last months and years
one of the key figurines on this carousel has been “omnichannel”.
Omnichannel is a term coined to depict that in a business world where a
“multitude of channels” are used to communicate and sell ones products
(direct selling, specialized retail, megastores, discounters, web shops,
online market-places and trading sites, social networks, comparison and
recommendation sites, mobile Apps, smart iTV…) and where "connected
consumers" are more and more moving “across all of these channels”
there is a strong need to create an “omni” experience (Latin, meaning
“universal, encompassing, seamless”) across all “touch points” of a
customer journey.
In fact, beyond just being a buzzword, omnichannel represents a seismic
shift for most retailers and manufacturers.
Take the German market for electronic consumer goods for example: Just
a decade ago the two leading German retail chains for consumer
electronics, Saturn and Media Markt, virtually set up “Berlin Walls” to
prevent their customers from moving online. In 2011 by acquiring the
online discounter www.redcoon.de they finally jumped on the inevitable
multichannel
train.
Today,
their
own
www.saturn.de
and
www.mediamarkt.de websites are full-fledged online infor-mation and sales
channels perfectly interconnected with their traditional offline businesses.
In fact, today about 50% of German electronic goods customers buying instore inform themselves online before they go into the store1. 87% of all
CE retailers in Germany are offering "Click & Collect" services now. And as
Saturn is proudly claiming, the rate of click & collect purchases among their
online sales is already reaching beyond 40%.2
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http://www.direktplus.de/aktuelles/meldungen/customer-journeys-im-elektrohandel/
http://www.telecom-handel.de/consumer-communications/click-collect-boomt-774342.html
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Like retailers also manufacturers have to adapt to these changing realities.
Take the German white goods brand MIELE for example. Not very long
ago, the company was not very keen on selling its premium brand
products via large-scale retailers such as Saturn and Media Markt. Today
they are not only among Miele’s top sellers in-store but also online
(http://www.saturn.de/mcs/brand/_miele,48352,334.html?langId=-3).
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What can other manufacturers and retailers learn from that?
First of all multichannel is a reality today. In order to truly benefit from it,
businesses do not only have to address different channels properly but equally important - to perfectly intertwine their activities for and within
these channels in order to create a true omnichannel experience.
But how do you build such an omnichannel experience? And which are the
key points to consider, not only as a blue chip company, but likewise as a
SME player?
Here are five important factors to definitely bare in mind:
1)
2)
3)
4)
5)
Define a strong “digital agenda” for your business.
Look and act “outside the box”.
Find the right “focus”.
Step up your “technological capabilities”.
Make your organization become truly “agile”.
(1) Define a strong “digital agenda” for your business
To start with, as the digital area is of course not the only building-block but
will increasingly become a central platform and enabler for most of the
future omnichannel experiences, for those companies not disposing of a
strong digital agenda yet, there is an urgent need to develop one.
The important “omnichannel” aspect in that is to stop developing separate
business models for your traditional offline business and your new digital
ventures, but to perceive and approach both as a unified playing field to
be best addressed with combined tools and measures.
Take the BOSCH blue example (www.bosch-professional.com). This range
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of professional power tools for trade and industrial applications has in the
past been primarily marketed via specialist retailers based on 1:1 offline
customer relations and services. With more and more of the specialist
retailers as well as professional end-customers turning digital, Bosch has
stepped up its digital initiatives significantly.
Apart from standard digital tools such an encompassing product overviews
and detailed product information, a webshop for spare parts, an online
learning campus and a professional b2b community (called “bob”), the
Bosch Blue website also contains a rising number of special elements
targeted at better connecting the online with the offline world like for
example an advanced dealer locator tool, offline feedback options
including a 12hours/7days application hotline as well as special
“promotional offers” to benefit from at offline as well as online premium
sales partners.
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Bosch’s newest service offer for professionals combining the offline with
the online world is "TrackMyTools":
https://www.bosch-professional.com/service/trackmytools/de/de/
For now, TrackMyTool is primarly a server-based inventory management
solution for managing and locating the power tool equipment within a
tradesman's business. Of course, inventory management is just a first
application area for this new IoT solution with the potential to become a
comprehensive service hub just in the same way BMW’s
"ConnectedDrive" service has developed over time to now comprise an
encompassing in-car online store.3
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http://www.bmw.de/de/topics/faszination-bmw/connecteddrive/ubersicht.html
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Also within real-life retail environments the capability to directly connect
and interact with such digital service hubs will get more and more
important. To address such demands, Bosch has developed the advanced
concept of "experience zones" bringing enhanced digital customer
experience to the POS of large DIY chains.4
In a similar manner BMW is currently stepping up its effort to enhance POS
experience with the help of means such as “POS Digital - Enhanced point
of sale” and “product geniuses”.5
Of course not many companies have the budgets of BMW or BOSCH.
Looking for a mid-sized company benchmark instead?
Take the German brand VORWERK which, a few years ago, most business
experts would have classified as antiquated and out of date. Not only by
means of a fundamental brand relaunch and a stunning innovation initiative
but also by turning its sales strategy from one channel (“direct sales only”)
into the direction of omnichannel (“Thermomix and Twercs Online
Shops”,“Thermomix and Twercs Online Communities”, Own Flagship
Stores,…) the company has managed to completely turn its business
around.6
https://www.youtube.com/watch?v=5MVyEQ0cYPk
http://www.kfz-wige.de/bmwi/13_05_29_BMWi_Checkliste.pdf
6http://www.twercswelt.de
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(2) Look and act “outside the box”
Many companies, when thinking about ways of digital enhancement, make
the mistake to only think within their own established “business boxes”,
e.g. existing sales channels or their own company website. However, in
order to create a true omnichannel experience companies are well advised
to look and act outside these standard areas.
Take the DIY example again. Many customers, when looking for
information and inspiration how to renovate their houses, do not any
longer go to stores on Saturday morning or just visit manufacturers’
websites. In fact, from their PC, tablet or smartphone they search for firsthand answers to basic DIY questions on sites like www.wikihow.com,
www.diydoctor.org.uk or in Germany www.gutefrage.net. They look for
inspiration on project and recommendation sites like www.houzz.com or
www.apartmenttherapy.com. They exchange ideas on general social
networks like www.facebook.com or within specialist DIY communities like
www.instructables.com. They browse for renovation pictures on
www.instagram.com or www.pinterest.com and watch “how to videos” on
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www.youtoube.com or specialist amateur craftsman sites like
www.handimania.com. They compare prices on comparison sites like
www.google.com/shopping, www.bizrate.com, www.pricgrabber.com or –
in Germany – www.idealo.de, www.preisvergleich.de or www.billiger.de.
And they may even order directly from online DIY shopping clubs like
www.westwing.de or on magalog-like interactive magazine sites such
as www.vtwonen.nl.
For businesses it becomes more and more important not only to be
present within this broadening web arena, but to actively interact with it.
As a consequence, “digital customer experience management” will play
an increasing role in turning potential and existing customers into true
brand advocates.7
(3) Find the right “focus"
Many people, even experts, tend to confound omnichannel marketing with
“all channel” marketing, i.e. the alleged need to be present anywhere
anytime (in any channel at any moment). In fact, even in an increasingly
automated marketing and sales world this is utopia. Actually, the need to
7
http://www.gartner.com/it-glossary/customer-experience-management-cem
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focus is not decreasing but in fact increasing in the broadening
opportunity space of digitally enhanced omnichannel marketing.
Especially smaller and mid-sized businesses are well advised to carefully
select the channels and touch points they want to focus their initiatives
on. Not all touch points within a customer journey are equally important.
And with more and more brands actively engaging in the digital arena,
customers are showing increasing signs of overload and counterproductive reactance. “At this stage, brands should be thinking about
listening more and speaking less, focusing on relevance over quantity,
trying to segment and target content more effectively and shifting the
balance from content creation to content amplification”.8
The good thing: New technologies such as “big data” and “one-to-onemarketing” are enabling businesses to focus, personalize and target their
marketing efforts better and to deliver relevant information, inspiration and
interaction just-in-time and just-at-the-place it is needed “on demand”
instead of spoiling the customer with unwanted marketing messages.
(4) Step up your “technological capabilities”
The big potential of going “omnichannel” is to deliver services that truly
matter to your customers, instead of just selling products. Some of these
services (such as real-time information on product features, warranties or
best applications) may be free. Others with an add-on character like
BMW’s "Concierge Service" or BOSCH’s “Rapid Repair” will cost extra
money, thus enabling businesses to earn extra returns.
Of course not all of these services will be entirely digital but more and
more of them will need digital interaction platforms to perfectly function.
This develop-ment is entirely altering the role of a company's online
presence:
8http://www.emarketer.com/public_media/docs/eMarketer_Key_Digital_Trends_for_2015-Whats_in_Store—and_Not_in_Store—
for_the_Coming_Year.pdf
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“A company’s online presence is not just another stand-alone channel or
brand booster platform: It is the linchpin of any multi-channel operation.
The online channel is the sales and service hub, the tool that collects and
disseminates the information that enables and facilitates the customer
experience across all other channels. It acts as an umbrella that connects
retail, e-commerce, search engine marketing, and search engine
optimization. It funnels customers from social networking sites to sales and
service touch points on and off the Web.”9
Companies wanting to play well along these lines usually have to
significantly step-up their marketing technology efforts. Only creating
nice frontend web interfaces with the help of creative web agencies will not
suffice to meet the increasing demands for interoperability and
accessibility to all kinds of information, imagery and data in an
omnichannel world. For that, considerable investments into the right
backend, database and cloud-based content management solutions are
indispensable.
Already four years ago, Lisa Arthur made the prediction that in near future
CMOs may spend more on IT than CIOs do.10
Although this may sound a bit exaggerated, it is showing a clear trend.
Beyond the amount of money spent, what matters even more is of course
the rising technological acumen marketing people need in the age of
digital disruption, not only to properly master the technological shift but to
combine this capability with the right dose of marketing intuition and
creative smartness.
Just as Greg Satel has posted it on Forbes.com on 10/12/2014: “The
future of marketing is not technology or intuition, but successfully
integrating both.”11
http://www.strategyand.pwc.com/media/file/Multi-channel-customer-management.pdf
http://www.forbes.com/forbes/welcome/
11 http://www.forbes.com/sites/gregsatell/2014/10/12/the-future-of-marketing-combines-big-data-with-humanintuition/#1a547e0e4331
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(5) Make your organization become truly “agile”
Last but not lease a key challenge for established incumbents not to loose
market traction in an omnichannel environment is to make their
organizations more agile to be able to act faster, smarter and with higher
flexibility.
As Heiko Klauer, Country Marketing Manager of Ikea Germany has recently
put it: “Omnichannel Marketing is no function. It is an attitude.”12
However, this attitude will only take full effect, if also organizational
cultures will change, structures get more flexible and people open to
cross over functional barriers more fluidly.
This is certainly the biggest strength of the new pure digital players: Their
capability to act and react much faster as the traditional market
incumbents. Take the world’s largest mail order company OTTO for
example. It has learned its lesson from new ventures such as ZALANDO
and is now trying to promote more iterative “project sprints” instead of
classical linear workflows.13
Of course, “transforming your marketing organization into an agile, more
collaborative organization” is no quick fix but a “significant challenge that
requires a strategic mix of standardization and flexibility to enable teams to
anticipate changes and execute quickly”. Nevertheless, it is worth
addressing this challenge: “A marketing organization that is willing to take
these challenges in order to become an agile organization that acts more
like a technology company will be best-in-class in meeting customers’
expectations.”14
http://www.absatzwirtschaft.de/ikea-marketingchef-omnichannel-ist-keine-funktion-sondern-eine-einstellung-71629/
http://www.symposion.de/kapitel47980101_WERK0003672.html
14 http://www.d-group.com/insights/building-the-marketing-organization-2-0-the-transformation-to-an-agile-way-of-working
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This is exactly what “omnichannel” is all about: Striving to become and
remain best-in-class in meeting your customers’ desires, in order to
create true value for them and your own business.
If you are not doing it yet, there is no reason to wait any longer for it.
Munich, 01/Feb/2016
Christoph Herrmann, Managing Partner hm+p
http://www.hmp-innovation.com | [email protected]
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